RBA shreds $4.1bn in cash as Australian’s scramble for new bills

The central bank shredded and burnt billions last year as demand for cash from concerned Aussies saw the cash supply grow by near-record levels.

Australians hoarded cash during the pandemic.

The pandemic has caused a speed bump in a near total changeover of Australia’s cash notes that saw the central bank shred almost $4.1bn last year.

The Reserve Bank’s attempt to improve security of notes in circulation comes as demand for new cash notes reached near all-time highs.

The amount of cash shredded by the RBA last year nearly reached a third of what was added by the bank.

Last year the RBA issued $14.7bn worth of banknotes to ­financial providers, of these only $11.6 were new.

The value of banknotes in circulation grew by 17.1 per cent in the 12 months prior to February this year. Of these, $50 notes represented almost 70 per cent of new notes issued since mid-March last year, with $100s making up another 20 per cent.

Total cash shredding across Australia last year worked out at almost $11m in notes biting the dust each day. Almost every day the RBA takes a mix of $5, $10, $20, $50 and $100 notes and shreds them.

Another $3.1bn in old notes were reissued after the bank determined they were still fit for use.

Last year returns of damaged and poor quality notes plummeted, as Australian’s stashed cash, although this has picked up again in early 2021. During 2020 the RBA processed almost 11,500 claims through its damaged notes facility, replacing another $3.4m in cash. But not all damaged notes are equal.

Notes with less than 80 per cent remaining are paid out at a proportion of the note remaining.

This means the RBA only pays $25 for half a damaged $50 note presented.

The aim behind the cash destruction program, coupled with the new notes, is to minimise the potential for counterfeit notes to circulate in the economy.

The RBA’s program has seen almost 66 per cent of $5 notes in circulation changed over to the new secure form.

The latest data from March shows almost 63 per cent of $10 notes have also been changed over. But only 2 per cent of $100 bills, the most widely held note, have been replaced.

Old notes, past their prime, are taken to the RBA’s National Banknote Site secure destruction facility in Melbourne.

These notes, once shredded, are sent to furnaces to be destroyed and melted down to stop the possibility that they could be reassembled and used or claimed through the bank’s damaged notes program.